Illegal Gambling Dens Thrive in Kazakstan
One year after a government clampdown on gambling, the casinos are as busy as ever - the only difference is that they no longer pay taxes.
Illegal Gambling Dens Thrive in Kazakstan
One year after a government clampdown on gambling, the casinos are as busy as ever - the only difference is that they no longer pay taxes.
On a quiet side-street in Almaty, the signboards outside the shops and office buildings proclaim the existence of a variety of saunas, shops, hairdressing salons and billiard halls.
But according to a police officer who knows these streets well, the signs are a facade. In fact, the real businesses operating in many of these establishments are illegal casinos.
They are carefully hidden from prying eyes, but the officer said it was not that difficult to detect them.
Even so, they are rarely closed down. “Each of the owners has his own ‘protector’ who can buy off anyone,” explained the policeman.
The existence of a thriving world of illegal casinos is direct result of legal changes in Kazakstan, where parliament passed a strict new law a year ago, forcing all gambling houses to relocate to a couple of resorts.
The two new designated “Las Vegases” were Kapshagay and Schuchinsk, on the outskirts of Almaty and Astana, respectively.
At the time, legislators complained of a national addiction to gambling, fuelled by the existence of an estimated 132 casinos and more than 2,000 arcades, together housing at least 23,000 slot machines.
But one year on, neither site has opened for business and the old casinos remain as active as ever - albeit now behind closed doors.
As for the gamblers, they take little notice of the fact that their habit has become illegal.
“Who cares where I spend my money? I earn it myself,” one self-confessed gambler named Igor told IWPR.
“I gamble and I will continue to do so. All these complexities in the form of bans don’t stop anyone. In fact it’s got even better because there are now fewer outsiders in the casinos now; they are all our own people.”
Most casino owners did not retire from the trade after the passage of the gambling law but merely disappeared from view.
One illegal casino owner named Asylkhan told IWPR that after the law was passed, he fired most of his employees and went underground with the rest.
Like many of his colleagues, he left debts to the banks after closing the doors of his legal operation.
“A few years ago, I took out a loan to expand the business,” he explained. “I still owe that debt.”
Political scientist Oleg Sidorov believes the decision to close most of the legal casinos was rash and poorly thought-out.
He says the main effect of the law has been to damage the economy rather than to cut levels of gambling.
“The casinos and slot machine halls that went underground still make profits - probably even ones than before,” he says. “The gamblers are still as active as ever.”
Asylkhan agrees. “The state came off worst because the casinos and slot machine halls enriched the treasury with their taxes,” he said. “Obviously, now we don’t pay any taxes.”
Bakhytbek Balginbaev, who works for the interior ministry’s organised crime department, told IWPR that while police regularly swoop on illegal casinos, they can take little action against the owners when they catch them.
During one recent operation, Balginbaev said, the police found seven illegal casinos and confiscated 55 slot machines.
“But the only punishments available are fines,” he said. “So far, I can’t tell whether these measures are effective.”
One police officer told IWPR the fines imposed on owners of gambling establishments had not had much effect.
“This business is very lucrative, so those who are earning easy money from it – lots of money - will never give it up,” he predicted.
The same officer maintained the law had too few teeth to be effective as a deterrent.
“Either gambling should be permitted, as that would help the country in terms of taxes, or else we need to increase the penalties,” he said.
Sidorov also described the existing penalties as ineffectual, because the fines are far lower than the average daily receipts of most of these establishments.
Most illegal casino earners are liable to fines of around 1,000 tenge, which is about nine US dollars. Yet sources in the police and gambling industry say a single establishment can expect to earn thousands of dollars a day.
According to government data from the end of 2006 – the last year before the ban came into force – annual tax revenue from casinos was worth more than 20 million dollars.
Meanwhile, the government is moving ahead with plans to develop the two gambling resorts in the north and south of the country.
Amandyk Batalov, deputy governor of the Almaty region, said in December that work on the Kapshagay project was in full swing. Some 11 hectares of land have been set aside, and there are potential investors for the project. Construction is due to start in 2008.
But Talgat Akuov, one of the heads of the Independent Association of Kazak Businessmen, said he doubted the new resorts would open their doors on schedule.
Before the government passed its gambling law, it should have put in place the basic infrastructure for the two resorts, he said, because individual casino owners do not have the resources to build a new site from scratch.
Natalya Napolskaya is an IWPR contributor in Kazakstan.
